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Twitter Plans To Raise $1 Billion Through IPO

Social Media Giant Tripled Revenue in 2012 10/03/2013 7:07 PM Eastern

Social media phenomenon Twitter removed the veil from its initial public offering intentions Thursday, revealing plans to raise as much as $1 billion in public funds as its moves to cement its place in the television and mobile landscapes.

Twitter first revealed plans to go public last month, announcing via tweet that it had made private filings with the Securities and Exchange Commission as part of a program that allows smaller companies to keep financial information shielded from the public as they try to drum up investor support.

According to the documents, the company nearly tripled revenue from $106.3 million in 2011 to $316.9 million in 2012 and is on pace to grow by another 60% in 2013, reporting $253 .6 million in sales in the first half of this year. At the same time the social media giant is hurtling toward profitability, reporting its first year of positive cash flow in 2012 -- $21.2 million. In the first half of this year, EBITDA has grown to $21.4 million.

The IPO is a fraction of that of Twitter’s main social media rival – Facebook – which launched a $16 billion offering last year. But that is mainly due to Twitter’s size –Facebook reported revenue of $5.1 billion in 2012, compared to Twitter’s $316.9 million.

Twitter, once derided because of doubts that it could build a business model on the 140-character ramblings of its users, has proven to be a force in advertising and is gaining a foothold in the television market, with recent deals with ratings measurement giant Nielsen. In the IPO, the company noted that it has grown monthly active users (MAUs) from 138 million in March 2012 to 218 million by June 30, 2013. Since its inception in 2007, users have issued more than 300 billion tweets.

And Twitter believes it has only scratched the surface. It notes in the prospectus that there is still a significant opportunity to expand its base – of the world’s 2.4 billion Internet users and 1.2 billion smartphone users, only 215 million are MAUs of Twitter.

According to the document, some of the proceeds from the IPO will be used to address expanding that base through geographic expansion, additional mobile applications, product development and establishing platform partners.

The company has been in a race for dominance of the second-screen with rival Facebook, and has created campaigns around big TV events like the NBA Finals, the NCAA Basketball Tournament, the Super Bowl (more than 24 million tweets were sent during last year’s contest alone) and shows like ABC’s Scandal. The company said in the prospectus that it is looking to expand its presence in the television arena.

“We plan to continue to leverage our media relationships to drive more content distribution on our platform and create more value for our users and advertisers,” the company said in the prospectus.

Twitter hasn’t set a date for its IPO yet, that should come in subsequent filings. The company did not specify which exchange it will trade on, but has picked its ticker symbol -- “TWTR.” Goldman Sachs is the lead underwriter for the offering, followed by Morgan Stanley and J.P Morgan.

September